The recent energy crisis, which lasted almost two years until 2023, seems to have made companies worldwide forget the importance of ESG. Even Germany has increased its use of coal to preserve its energy supply.
In its decarbonization efforts, the oil and gas sector has moved away from renewables and electricity, reinvesting in fossil fuel exploration. No wonder global energy-related CO2 emissions grew by 1.1% last year.
Are green initiatives becoming a thing of the past?
Indeed, ESG-focused funds have seen significant outflows in recent years.
Apart from the fear of an energy deficit, the lack of interest in ESG investments is due, among other things, to companies' frequent misreporting and the reduction in public support.
The choice between saving the planet and affordable electricity bills will be between saving the planet and affordable electricity bills. Otherwise, factories could close, weakening the economy, and that is something the government cannot allow.
What next?
There are reasons to believe that we will not yet have regained the previous green momentum, including the growing need for electricity in addition to geopolitical risks. Cryptocurrency miners are not the only ones to blame; tech companies are also.
According to Wells Fargo, AI data centers alone are expected to add about 323 terawatt hours of electricity demand in the US by 2030. Goldman Sachs projects that data centers will account for 8% of US electricity consumption by the decade's end.
Not surprisingly, Warren Buffett's Berkshire Hathaway recently bought another 2.95 million shares, bringing its total position in the company to 29%. However, oil is not the only beneficiary of the growing energy demand.
An alternative largely ignored since the Fukushima disaster is gaining traction. In their search for electricity supply, US technology companies have contacted the country's nuclear power plants.
According to the WSJ, Amazon is close to a deal with Constellation Energy to supply electricity directly from an East Coast nuclear power plant. If the agreement is reached, the company will receive 24/7 carbon-free power.
Is it time to buy shares in nuclear energy companies?
The fact that even Bill Gates has decided to invest billions in nuclear power suggests that this is a long-term trend, not just a fad. However, it is still too early to know how popular it will become in data centers, so recent demand for nuclear stocks has been losing momentum.
Investors should also follow the economic calendar to monitor financial health data, AI development, and global energy consumption. If activity continues to slow, it could also negatively affect the outlook for nuclear power demand.